Vietnam is a small country, yet, has a huge unexplored potential for global investors. There are some reasons why you should consider incorporating in this jurisdiction:
Its strategic location: Vietnam has its border next to big seas and, noticeably, to China. Recently, it has witnessed that many large groups have shifted much of their investment from China to Vietnam for better gains.
Fast-growth economy: Vietnam has a steady increase in GDP and maintains a stable inflation rate over the years. More policies are coming into force to welcome foreign investment.
Low labor cost: Vietnam has a lower cost of labor when compared to China. According to Statista, the labor cost in China was 5.78 USD in 2019 and it is expected to go up to 6.5 USD in 2024. Meanwhile, the cost of labor in Vietnam was just 2.91 USD and 2.99 USD (only half the cost in China).
Tax advantage: Vietnam offers quite an appealing corporate tax rate, at 20%. Along with that, many favorable tax rates have been applied to different sectors or areas in the nation.
It is obvious that you need a company to get access to Vietnam’s rich investment opportunities. However, the process of establishing a company in Vietnam for foreigners is rather complex and confusing. But don’t worry, after reading this post, you will know the procedure to do it.
Years ago, you only needed to apply for an investment registration certificate to register for a foreign-owned company in Vietnam. However, through some amendments in the Vietnam Law on Investment, now you need to obtain 2 types of certificates: investment registration certificate and enterprise registration certificate.
1. Application for an Investment Registration Certificate (IRC)
Since establishing an enterprise is considered an investment in Vietnam, the first thing you need to do is getting an investment registration certificate. This certificate contains basic information about an investment project, including:
- Number of the investment project;
- Name and address of the investor;
- Title of the investment project;
- Details on project operation site and land area to be used;
- Objectives and scope of the project;
- Investment capital of the project (including investor’s contributed capital and mobilized capital) and schedule of capital contribution and raising;
- Operation duration of the project;
- Project operation schedule in details;
- Investment incentives and supports (if any);
- Conditions on the investor that carries out the project (if any);
As for the application to get an IRC in Vietnam, you generally need to prepare the following documents:
A written proposal of the investment project (e.g. opening a company in Vietnam);
Identification document of investors (including you) (identity card if you are an individual or business registration certificate if you are an organization);
Details on investment project (location, capital contribution, details on investors, etc.);
Document that proves investors’ financial capability (financial statement for example);
Document that proves the right to use the land for carrying out the investment project (to locate the company).
These documents need to be submitted to a business registration agency (Vietnam’s department of Planning and Investment). The processing time usually lasts from 15 days to 30 days and the result will be sent to you afterward.
Note: The above documents are just standard documents. If your business line or business investment needs further examination and approval from a higher-level government agency, then there will be more documents to be submitted. In this case, the processing time also will be extended to 45 days or even longer. In case your business investment is located in an industrial zone or economic zone, you need to submit the application to the agency that is in charge of that area.
In practice, the process of getting an investment registration certificate in Vietnam is rather complex since there are plenty of papers to be prepared and submitted. You are advised to consult professional experts, to register a Vietnam company.
Other alternative jurisdictions for Vietnam, if you are seeking for a place with zero or low tax coupled with easy procedures, include Belize, BVI, Seychelles, etc. The business entity types in these jurisdictions are renowned as “offshore company”. You may want to find out more here.
2. Application for an Enterprise Registration Certificate (ERC)
According to the law, only when you get an investment registration certification can you apply for an enterprise registration certificate in Vietnam. An ERC contains basic information of your enterprise in Vietnam. It acts as proof that your business is successfully formed with the approval of the Vietnam government.
The required documents for an ERC vary according to different types of enterprises in Vietnam. The most chosen type of business by foreigners is limited liability company. However, there must be a business registration proposal containing the following main information:
o Name of the enterprise;
o Address of the enterprise;
o Business sector of the enterprise;
o Charter capital;
o Details on shares;
o Tax registration number;
o Name, signature, address, nationality and personal identification documents of the enterprise’s law representative (in case of forming a limited liability company or joint-stock company) or of the owner (in case of forming a sole proprietorship) or of each partner (in case of a partnership).
The business registration proposal along with other required documents need to be submitted to a business registration agency. The processing time to examine your application usually lasts from 3 days to 7 days. An enterprise registration certificate will be approved and issued to you if your enterprise satisfies the following overall conditions:
o The registered business sector is not banned;
o The application is qualified;
o The business name is approved (by meeting specific conditions);
o All fees have been paid.
If your application fails, the business registration agency will also inform and state what you need to fix or what file you need to provide or verify.
All in all, you need to obtain an investment registration certificate and an enterprise registration certificate in order to establish your enterprise in Vietnam. The process of forming a company in this jurisdiction is quite complex since there is a lot of paperwork to be done.
If you are still new to Vietnam, you may find it confusing and hard to deal with the procedure. Thus, the best option is to have experts do it for you. BBCIncorp is the one that you can trust. You may want to find out more here.